Finance News by Mazars Romania - July 2021

Mon | 26.07.2021

Accounting/audit/tax

Finance News by Mazars Romania - July 2021

Mazars publishes its latest Central and Eastern European Tax Guide – Mazars’ study

Mazars released the ninth edition of the Mazars Central and Eastern European tax guide, that has the purpose to help investors compare the fundamental factors of competitiveness. The report on the current taxation regimes of the CEE covers 21 countries: it includes the Visegrad countries, Southeast Europe, Russia, Ukraine and the Baltic states.

VAT and new rules for e-commerce

There was no change in VAT rates across the region over the past year, with standard VAT rates averaging at 21%, but showing major differences across the examined countries. The 27% and 25% standard VAT rates in Hungary and Croatia remain particularly high. By comparison, in Germany, where the average wage is already close to €4,000, the standard VAT rate is 19%.

Corporate income tax

It remains obvious that countries in the region place a very different emphasis on the taxation of corporate revenues: there is a difference of 22 percentage points between the lowest and highest corporate tax rates. Germany has the highest corporate income tax rate (31%), the lowest are Hungary and Montenegro (9%), while the mainstream corporate tax rate in the countries of the region is typically between 15-20%. In Romania, the general corporate income tax rate is 16%.

Transfer pricing

By 2021, transfer price regulations appeared in the tax regimes of almost all countries, except for Montenegro. The OECD's country-by-country reporting (CbCR), aimed at improving transparency, makes the information needed to assess tax risks available to local tax authorities.

Read more info HERE.

Brexit – adapting to a changing environment, its impact on the Romanian economy, and what rules you should follow, both as a business owner, as well as a citizen – Mazars’ analysis

At the end of 2020, the European Union (EU) and the United Kingdom (UK) signed The Trade and Cooperation Agreement, a document that outlines the new way of collaboration between the companies and the citizens of the two territories.

The impact of Brexit on the Romanian economy and companies

The new status of the UK – now a third party country in relation to EU Member States – is reflected and will continue to have implications especially over the degree of interest and profitability of the investments. Now, the flows of goods and services, the mobility of individuals, but also the flows of capital must be viewed through a new perspective – facts that were interspersed with the restrictions generated by the COVID-19 pandemic. Finally, we are talking about a major change, given that UK companies are no longer considered participants in the EU's single market and beneficiaries of the free movement of people, goods, and services.

Tax after Brexit – fiscal changes and implications

One of the biggest challenges for the Romanian business environment is certainly the almost real-time follow-up of the legislative changes that Brexit has brought, including from a fiscal perspective.

After 1 January 2021, several tax implications and changes have arisen with regard to relations and transactions with the UK, of which the following are the most significant.

As regards indirect taxes, the common provisions of the system of VAT, excise duty or customs formalities are no longer applicable at the UK level – the UK currently having the status of a third country in relation to the Member States of the Union. Important implications for the supply of goods and services appear, as the relevant coordinates in terms of value-added tax (VAT), customs duties, and excise duties have changed – so that, for example, a supply of goods to the UK is now an export, which entails the need to reanalyze the implications in the VAT sphere. There are also immediate effects on cross-border VAT refund requests as well as on the supply of goods and services to non-taxable consumers (B2C).